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Monday, 27 July 09
COKING COAL, IRON-ORE LIKELY TO BENEFIT NON-INTEGRATED STEEL PRODUCERS
 Economictimes reported that, The second half of the financial year 2008-09 was one of the toughest periods for steel companies, especially the non-integrated players without access to captive sources of raw material. The double whammy of falling sales realisation and higher input costs pulled down operating profit margins significantly.
The non-integrated producers continued to pay higher raw material prices as a part of long-term contracts signed during the beginning of the year. However, as old contracts have come to an end and new ones are being signed, these companies are breathing a sigh of relief.
The new contracts have taken into consideration the current market realty. The prices of two key inputs –
–iron ore and coking coal – have come down more than 50% in the spot market. As per reports, steel firms have signed long-term contracts for coking coal at around $110-120 per tonne and iron ore at $65-70 per tonne.
The new contract prices mark a decline of around two-thirds and one-third from their yearago levels for coking coal and iron ore, respectively. Steel prices have also fallen sharply during the same period. Because of these developments, it is essential to understand the impact of the new prices on the profitability of major steel producers, especially the non-integrated ones, for the next few quarters.
Steel prices in a number of countries have been regulated in past year, and India is no exception. Current international steel prices are 50% lower than year-ago levels and in India the decline has been 25-35 %. Accordingly, depending on the company’s market (domestic and overseas) exposure, the impact on profitability of new long-term contract will vary.
Going by international prices, a company with an operating margin of around 25% last year is expected to see a contraction in margin by around 1,000-1 ,300 basis points compared to year-ago levels. It means the fall in steel product prices outweighs the drop in input costs. The only solace for such a company is the improvement in margin from the previous two quarters. Sequentially, there could be an improvement of more than 500-1 ,000 basis points in the operating margin to 10-15 %.
For instance, many international steel producers reported either losses or a 5-8 % operating margin during the Mar ’09 quarter. Such companies are definitely going to see better days ahead. In India, Tata Steel, which has significant operations in Europe, is going to be one of the key beneficiaries. The operating margin of Corus, however, is not expected to exceed 2%. The new pricing will have a bigger impact on domestic companies.
Domestic steel prices have not fallen much due to government intervention and relatively higher domestic demand. Also, coking coal, which accounted for around two-thirds of raw material cost last year, has witnessed a much sharper decline in prices compared to iron ore. And most of the coking coal consumed in India is imported and its pricing depends more on the international environment rather than the domestic market. Hence new coking coal contract prices will capture the poor international market conditions.
The benefit of new long-term contracts for domestic players would depend on factors such as the extent of dependence on external suppliers for raw materials, actual contract prices and the month from which the contract became effective, among others. Higher the dependence on external suppliers, more the benefit.
Of the top five listed steel companies, JSW Steel and Ispat Industries are likely to benefit the most. The average operating margin from the September quarter onwards is expected to expand by around 1,000-1,500 basis points compared to the Mar ’09 quarter. The June quarter, however, will see a partial impact, depending on when the new contracts came into force.
Other top players that are likely to benefit are Steel Authority of India (Sail) and Jindal Steel & Power. Both of them are self-sufficient in iron ore but depend on outside suppliers for coking coal. The positive impact on the operating margin of these companies on account of the new prices would not be more than 500 basis points though.
Source: Economic Times - India Times
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Wednesday, 15 July 09
INDONESIAN FIRM SUBMITS LOWEST BID FOR NAPOCOR COAL
ABS-CBN News reported that, An Indonesian firm offered to supply 195,000 tons of thermal coal to top Philippine electricity producer National Power ...
Wednesday, 15 July 09
INDIAN COAL MINISTRY TO CONSIDER POWER PLANT ALTERATION PROPOSALS
PTI reported that the coal ministry has agreed to consider applications of power plants seeking long term coal linkage due to enhancement in electri ...
Wednesday, 15 July 09
SHENHUA STARTS WORK ON INDONESIA POWER PLANT
Bloomberg reported that China Shenhua Guohau Power a unit of China’s biggest coal producer started construction of a power plant and mine in I ...
Wednesday, 15 July 09
PLN OPENS TENDERS FOR SUPPLY OF LOW - GRADE COAL
The Jakarta Globe, a Indonesian new paper reported that, State power utility PT PLN has opened a tender for the supply of low-grade coal for the nat ...
Tuesday, 14 July 09
MMTC SAYS MAY RE-TENDER FOR 12.5 MLN T COAL
* KIS has demanded investigation into procurement
* MMTC says import delays could add to power shortages
Alibaba reported that, India's s ...
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- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Australian Coal Association
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
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